Well-written contracts are essential to a company’s success. Business transactions would likely be more straightforward if parties could be trusted to keep their word. Unfortunately, this is not how the business world works. Entering into significant business agreements without a legally binding contract can be disastrous. Contracts are used to formalize partnerships, employer-employee relationships, purchase or sell agreements, loans, and for a wide range of other transactions or purposes. When an involved party violates the terms of a valid contract, the injured party may file a breach of contract claim in court. There are several remedies for breach of contract that the injured party may be entitled to depending on the circumstances.
What is a Breach of Contract?
A breach of contract occurs when one party to an agreement fails to perform as promised in the terms and conditions of a contract. More specifically, a breach of contract is a violation of any agreed-upon terms and conditions within a valid contract. The breach could be any action or lack of action from a late payment to a more serious infraction, such as the failure to deliver a promised good or service.
Types of Contract Breaches
While contracts can consist of various of legal agreements and terms, a breach of contract is classified in just a few ways. The four main classifications of contract breaches are:
Material Breach of Contract
A material breach of contract occurs when one party to an agreement receives a significantly different result or less benefit than what was specified in the terms and conditions of a contract. Material breaches can be a result of a party failing to perform the obligations laid out within a contract or failing to perform obligations by a specified time. When this type of breach occurs, the other party may file a claim to pursue damages related to the breach, including its direct and indirect effects.
Minor Breach of Contract
Also called an immaterial breach or partial breach of contract, a minor breach of contract is less serious than a material breach. This refers to situations where the party in breach failed to fulfill some part of their obligation, but the breach does not hinder the completion of the contract. In these cases, the party that suffered the breach may only seek a legal remedy if they can prove the breach resulted in a financial loss.
Anticipatory Breach of Contract
A breach of contract need not actually occur for the culpable party to be liable. In situations of anticipatory breach of contract, an actual breach has not yet occurred, but one of the parties to an agreement has indicated refusal to comply with contract obligations, making it impossible to complete the contract. This type of claim can be based on notification received indicating a party will not fulfill their obligations. However anticipatory breach of contract could also be based on actions indicating one party does not intend to or will be unable to deliver.
Actual Breach of Contract
An Actual Breach of Contract refers to action that has already occurred. The breaching party has either failed to fulfill their obligations by the due date or they have performed their duties improperly or incompletely.
When a breach does occur, there are several types of remedies for breach of contract that the other party may pursue. These include compensatory damages to address direct economic losses stemming from the breach, and consequential losses, which are indirect losses that go beyond the value of the contract itself but are the result of the breach.
What is a Remedy in Contract Law?
A “remedy” is a court-ordered resolution or compensation to one party’s breach of contract in contract law. The goal of remedies is to make the non-breaching party, also known as the “injured party,” whole by placing them in the position they would have otherwise been in had the contract been performed as agreed.
What are the Possible Remedies for Breach of Contract?
The fundamental purpose of a remedy is to restore an injured or aggrieved person to their position before the injury or wrongful action occurred. There is an assortment of remedies available for a breach of contract claim. The appropriate remedy or compensation is dependent upon the circumstances. The injured party will need to demonstrate that the other party failed to perform to be entitled to any remedy.
Equitable Remedies vs Legal Remedies
Remedies for breach of contract can generally be divided into two categories: legal and equitable. Legal remedies allow the non-breaching party to recover monetary damages. In contrast, equitable remedies are non-monetary solutions to resolve the disputed issue.
Equitable remedies in breach of contract are actions rather than a financial award. Often, equitable remedies are granted when financial compensation or other legal remedies do not furnish adequate resolution. Sometimes a court will not award equitable relief unless legal damages are unavailable. In other cases, the judge may award equitable relief if it’s difficult to calculate an actual amount of damages.
Types of Legal Remedies for Breach of Contract in Florida
There are several common legal remedies for breach of contract claims. The appropriate remedy depends on factors such as: terms of the contract, nature of the breach, and specific circumstances of the case.
Four legal remedies for a breach of contract are:
I. Compensatory Damages
This form of monetary damages takes care of the direct losses, for example, the actual damage borne by the plaintiff. The compensatory damages are paid to compensate the applicant. These damages, sometimes called general damages, are remedied in the form of monetary damages.
II. Special Damages
Special damages occur as a result of the breach itself. The petitioner does not bear a direct loss, but in the form of the profit, he would have made on the delivery of the goods that he ordered. In case, he does not receive his order, the damages made are not direct but doesn’t harm or affect the contract.
III. Liquidated Damages
At the time of the contract, the parties fix an amount of money as a remedy for damages in case of a breach. The remedy will be ensured if the intention of the plaintiff seems honest, and it will be declared invalid in case of a punishment for the breaching party.
IV. Punitive Damages
One of the remedies is punitive. It’s termed as punitive because they punish a breached party’s behavior, either intentionally or negligently.
Types of Equitable Remedies for Breach of Contract in Florida
Equitable remedies Florida has designed three remedies for breach of contract that are discussed below.
I. Specific Performance
There are certain matters or contracts where a party is unable to perform its role established in a contract, so in that situation, it is useless to go to the court and ask for a remedy. Therefore, such remedies are created outside the court.
Restitution is one of the top-notch remedies for a breach of contract. It involves the refund of the damages or harms made to the plaintiff. The remedy is provided after finding out how much the defendant has benefitted from the breach and damages made to the petitioner.
Rescission is a highly sought remedy for a contract breach. In such a remedy, the contract is annulled. For example, if there are two parties in a contract, one party had to manage and plan the project, and the other had to pay the expenses. If one party does not plan or manage properly and the contract is breached, then the contract is undone, so the other party does not have to pay the expenses.
Contact a Florida Business and Commercial Law Attorney
Business contracts are legally enforceable promises between two or more people or entities. When a person who enters a business contract fails to uphold his or her responsibilities, a breach of contract claim may rectify the harm caused by the breach.
The Florida Breach of Contract Lawyers at Boyer Law Firm, P.L. can provide you with assistance determining an appropriate remedy in your matter and help you to seek relief from the court if you have been the victim of a breach of contract.
Call us today to schedule a strategy session and to discuss your business law needs.